Net profit of Singapore’s United Overseas Bank (UOB) jumped 29% on-year to S$2.0bn ($1.5bn) in the first half of the year, as lending grew 6% and impairment costs fell by nearly S$300m.
Net interest income rose 2% to S$3.11bn while fee-based income increased 28% to S$1.23bn in the first six months of the year. Impairment charge sharply dropped to S$383m from S$682m in the year-earlier period.
“Our diversified customer franchise and investment in digital capabilities have enabled us to deliver another strong set of results. We achieved a 29% increase in 1H21 profit, driven by healthy contributions from our core businesses and resilient asset quality,” said Wee Ee Cheong, UOB deputy chairman and chief executive, in a statement on Wednesday.
Steady asset quality
In the second quarter, the bank’s net profit was at S$1.0bn, relatively unchanged compared with the first quarter, but soared 43% from year-ago period. Net interest income in April-June quarter was at S$1.58bn, up 3% on-quarter and rose 8% on-year.
Non-performing loan ratio stood at 1.5% at the end of June, down slightly from 1.6% at the end of December. UOB’s common equity tier-1 (CET-1) capital ratio, key gauge for a lender’s ability to operate under distress conditions, was at 14.2% at June-end compared with 14.7% at the end of 2020.
“Our robust balance sheet and strong capital and liquidity positions also enable us to support our customers in capturing new opportunities arising from the growth momentum in Greater China and developed markets. We are accelerating our digital agenda to provide progressive solutions in anticipation of their business and personal financial needs. With countries speeding up their vaccination drive, we are optimistic that the situation will gradually pick up in Southeast Asia," said Cheong.
The Singaporean lender also announced an interim dividend of S$0.60 per share, marking a dividend pay-out ratio of 50%.
UOB’s shares rose 0.7% to S$26.05 in early trade on the Singapore bourse following the earnings report.